Revisiting Cooperative Principles: Digital Frictions

Installing new signs, Central Cooperative Wholesale Records, im111739, Box 40, IHRCA426, Immigration History Research Center Archives, University of Minnesota.

Since at least the nineteenth century, the cooperative principles have been the closest thing to a unifying document for a movement that has always been eclectic. The principles have served both as a manifesto and a technical guide to cooperative practice, dictating not just the elemental “one vote” rule, but also details about accounting, interest, prices, and membership policies. My ICDE research revisits the long history of cooperative principles to think through the challenges they pose to platform cooperatives. 

Though not new dilemmas, platform co-ops struggle to maintain cooperative structures while handling the particularities of digital economies, raising enough capital, and navigating government partnerships often necessary for their survival. What tensions emerge between cooperative practice and digital technology? How do cooperative principles function in co-ops that transcend the place-based geographies that have traditionally supported their growth?

Platform co-ops can find roots in a story already well-known in the cooperative movement. The famous “Rochdale Pioneers” embodied a struggle not only against capitalist wage labor, but also against mechanization. Most of them were weavers, a group with a militant history in the region that quite recently included machine-breaking. The Luddites staged their most active assaults against the British textile industry only a couple of decades before the Pioneers opened their cooperative store in 1844. Cooperatives were yet another attempt to retain economic autonomy lost through dual processes of dispossession (of land and tools) and mechanization.

Platform cooperatives belong to this legacy. Far into the reign of wage labor, digital technology is again emerging under corporations who deny basic labor rights, let alone worker ownership. While platform co-ops seek to reclaim digital tools, their emergence reveals the problem technology presents as it develops with and through capitalist markets. Even when automation does not threaten livelihoods directly, technologies developed outside workers’ control tend to make their lives harder, rather than easier. For the companies who do own these technologies, the capacity to exploit only grows as people are pushed into ever more precarious “gig” labor.

Ride-hailing drivers in India are staging protests against the labor practices of Ola and Uber.

Despite two centuries since the industrial revolution in which the modern cooperative took form, the conflicts between cooperation and technology then and now are familiar. Platform cooperatives take on corporations that rely on huge labor reserves while saving the workers themselves no labor. In the mainstream platform economy, worker exploitation is a default, not least because in countries like the US and UK, companies refuse the responsibilities normally assumed (if not fulfilled) by employers who designate their workers as “independent” contractors.

CCW Headquarters in Superior, Wisconsin, Central Cooperative Wholesale Records, im111133, Box 35,IHRCA426, Immigration History Research Center Archives, University of Minnesota.
CCW Headquarters in Superior, Wisconsin, Central Cooperative Wholesale Records, im111133, Box 35,IHRCA426, Immigration History Research Center Archives, University of Minnesota.

Cooperatives expose this false autonomy: in a co-op, workers both own and govern the business. The principles guide these twin processes. At the turn of the twentieth century, cooperative institutions formalized the cooperative principles. By the 1930s, institutions like the Finnish-organized Central Cooperative Wholesale in the United States developed entire regional economies built on the Rochdale method. The ICA officially endorsed the Rochdale-derived principles as the internationally-recognized “cooperative principles” in 1937. For almost a century since, despite internal disagreements and subsequent revisions, the ICA principles have remained remarkably unchanged:

  1. Voluntary and Open Membership
  2. Democratic Member Control
  3. Member Economic Participation
  4. Autonomy and Independence
  5. Education, Training, and Information
  6. Cooperation Among Cooperatives
  7. Concern For Community

Historically, the principles have combined two functions: to protect cooperative integrity, and to ensure viable businesses. The second has been especially complicated. Radical as they were, the Rochdale principles embedded the tensions cooperatives encounter wherever they compete with capitalist business. The Pioneers became influential not because of their ideas (already established in societies well beyond England), but because of their ability to use and adapt capitalism’s infrastructure. In socialist journalist George Holyoake’s influential account, what gave the weavers “pioneer” status was their ability to retool the basic instruments of modern capitalism–specifically, debt and interest. Still today, cooperative principles embody this fragile balance between the dominant (capitalist) economy and another one yet to be made. Well-known to cooperative scholars and developers, this possibility-and-compromise structures the cooperative principles and helps us understand the challenges platform co-ops inherit.

Co-op Ride, the ride hailing app by the Drivers Cooperative

Concerns about cooperative principles revolve especially around the need for capital itself. Platform co-ops face special pressures as they fight against Big Tech hegemons like Uber and other corporations with access to enormous financial and legal resources. In order to compete, cooperatives usually require looking beyond their immediate memberships. Seeking this external funding can be fraught, threatening member economic participation (the principle that members invest in, and so own, the business) and autonomy (the principle of collective self-governance free from outside interference). Together, these principles have worked to defend cooperative independence from precisely the sources that emerge most often in discussions about funding platform co-ops: external investors (namely, venture capital) and government. The ongoing search for capital complicates the logic that underlies all cooperative principles: the foundation for cooperation is not philanthropy, but mutual aid.

The specter of venture capital hovers over all technological enterprise, but poses major problems for cooperative principles. As businesses, cooperatives possess the rare quality of being, by design, unattractive investment prospects to those outside them. The principles encourage cooperatives to fund themselves, and restrictions on profits and voting dissuade external funders who can gain limited money or power from investing. This makes co-ops poor candidates for VC funding, as backers have no reason to fund projects that will not reward them financially. Moreover, as a 2019 report on the “capital conundrum” observes, the speculative nature of VC firms makes their structure particularly incompatible with platform co-ops. 

While states share complicity with capitalist firms in constructing the profit economy, government partnerships show promise for allowing platform cooperatives to compete on this wildly unequal ground. As one PCC policy proposal details, platform co-ops have effectively worked with governments to fund and grow cooperative economies locally. Most of these partnerships happen at the municipal level, where governments can support cooperatives through public procurement practices, legal and technical infrastructure, and financial backing. Local governments have supported cooperative development where traditional cooperative methods face limits, especially in the critical early years. In New York City, for example, the Drivers Cooperative gets business from the city’s Access-A-Ride paratransit service. Though not without risk, government aid of this kind holds the potential to enable cooperative autonomy in the long term.

Less explored among platform co-ops, community-based capital presents another possible resource. Community investment structures already operate elsewhere in the cooperative economy. Organizations such as the Cooperative Fund of New England, Seed Commons, the Sustainable Economies Law Center, and the Boston Ujima Fund have been creating cooperative finance systems that allow people and institutions to invest in cooperative businesses directly, often in the places where they live. (SELC even runs an online community that helps people move their retirement savings into cooperatives and the broader solidarity economy.) These community investments open pathways for people to voluntarily join in building cooperative economies, with fewer threats to cooperative autonomy.

Drawing on the longer arc of cooperative organizing and case studies of contemporary platform co-ops, my fellowship research explores the capital question within a wider study of how cooperative principles might be rethought in the digital economy. How do cooperative businesses preserve cooperative principles in sectors where they depend on external sources to operate? How can co-ops make use of digital technologies without replicating the exploitation and extractivism that make possible the dominant platform economy? What adaptations or additions do cooperative principles need to work on digital terrain?

Reconsidering the cooperative principles in a digital moment suggests that while platform co-ops may be new, cooperative traditions already show a path toward a technological politics rooted in autonomy, democracy, and collective ownership.

[Image credit for top image: Installing new signs, Central Cooperative Wholesale Records, im111739, Box 40, IHRCA426, Immigration History Research Center Archives, University of Minnesota.]